Sony faces $3.2bn loss after quake, hacks

Sony faces $3.2bn loss after quake, hacks

Summary: Things have been pretty grim over at Sony Corporation this year. So bad, in fact, that Sony has re-evaluated earnings predictions for the 2010/11 fiscal year from a profit to a loss of US$3.2 billion.

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Things have been pretty grim over at Sony Corporation this year. So bad, in fact, that Sony has re-evaluated earnings predictions for the 2010/11 fiscal year from a profit to a loss of US$3.2 billion.

Consolidated results

Sony's new results forecast (Credit: Sony Corporation)

According to Sony's financial year 2010 forecast revision announcement, Sony has reversed the expectation of a ¥70 billion (US$858 million) profit to a net loss of ¥260 billion (US$3.2 billion).

The reasons behind the drastic earnings change are fairly obvious. Considering the majority of Sony news lately, it would be easy to pin all of it on the security nightmare that ensnarled the PlayStation Network (PSN) worldwide for the last several weeks. While that mess was definitely a contributing factor, it is only expected to account for ¥14 billion (US$171.2 million) in losses.

But there's really a bigger culprit. Sony is attributing at least ¥22 billion (US$269 million) in losses to the earthquake and tsunami in Japan this past March.

During the fiscal year ended March 31, 2011, Sony expects to record charges of approximately 12 billion yen, consisting principally of idle facility costs at manufacturing sites and an incremental provision for life insurance policy reserves. In addition, there is an approximately 5 billion yen impact from the estimated net margin loss associated with a decrease in sales resulting from the Earthquake and an estimate of variable costs.

Furthermore, Sony expects to incur incremental expenses, including restoration costs (e.g., repair, removal and cleaning costs) directly related to the damages caused by the disaster to certain fixed assets including buildings, machinery and equipment as well as inventories, in addition to charges for the disposal or impairments of fixed assets and inventories.

Again, these figures are just estimates. Official numbers will be posted on Thursday.

Despite all of the bad news, Sony is trying to keep an optimistic outlook for financial year 2012 with expectations for higher consolidated sales. The official forecast for next year will be announced on 26 May.

Via ZDNet US

Topics: Security, Tech Industry

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